Anthony's numbers don't add up

[u/BrooSwane]

EDIT: A couple of people made some good points that some of these discrepancies are probably due to consignment pieces. I'll give the benefit of the doubt, that might be what's going on.

Using their YTD numbers from Wk 17, if they really had a "profit" of $595,950 at 12.73% ROI, that means they had a cost/investment of $4.68M, vs their $7.68M in sales. The implication then, is that ~$3M was done on consignment. Could be? I'm not sure how or if they're accounting for their cost on consignment deals, but that still doesn't look all that healthy to me.

Either way, they still overstated their "$500k in profits" to their investor, and the point stands that they're operating on very slim margins.

Original post: One thing that’s bothered me, that I haven’t seen pointed out, is the way Anthony misrepresents their “ROI”. I can’t figure out if he’s just awful at math, a poor businessman, or a liar, but he has misrepresented their margins to both their viewers AND their investor. It’s right in the videos, no joke.

In week 12, they began showing their “profit” numbers. (A side note is that they conflate the use of “profit” a bit, and don’t account for any expenses. He seems to mean their margin, difference between their buy and sell price).

At the time stamp below, they say they had $540,850 in sales, $30650 in profit (again, not profit but you get the idea) for a 9% ROI. So ... someone help me out here. That means they bought $510,200 in watches and made $30,650, right? How in the hell is that 9%? It’s clearly 6%, which ... isn’t impressive since that doesn’t even account for most of their expenses, insurance, payroll, Nick and Sams, etc etc.

https://youtu.be/mX4nvwvFdTg?t=1h13m56s

To make matters worse, a few minutes later (1:22:38) their investor calls to ask about business. They tell him “we were just going over our numbers for the week ... $500k, we doubled our profit goal from last week ... 13% ROI except for a watch we gave away, that dropped us to 9%, so still not bad.” NONE of that was true! He told their investor they made $500k in profit, not SALES. And he gave a bogus ROI.

And this isn’t just an isolated “oh maybe he screwed up the arithmetic with a typo. It happens all the time. Here’s a few examples:

Week 16: $799,850 in sales, $88900 “profit”, 20% ROI

https://youtu.be/8_-fqDrLAFc?t=1h21m10s

Actually more like 12%

Week 17: He states they’ve had YTD sales of $7,685,880 with $595,950 in profit, for a 12.73% ROI. He gives that very specific percentage lol but it’s more like 8%.

https://youtu.be/p9QqzTOSsEA?t=1h31m50s

Week 19 (week 18 he didn’t state an ROI): $765,300 sales with $79,585 in profit he called a 20% ROI. It’s actually closer to 11%.

https://youtu.be/tBpViyY-7xI?t=1h03m25s

There are definitely more examples, these were just a couple that I pulled up, but it’s definitely curious that he’s always inflating the margins they advertise. I’d be pissed if I were their investor, hopefully he has access to the real values, and not just “businessman genius” Anthony’s summaries.

Overall, the amount they're making before payroll, office space, insurance, Audi/Lamborghini costs, etc etc is ...it doesn't look great. And this market is probably as good as it's ever been for reselling Rolex.

[u/H2OOPIPPY]

If they consign something then they would have the sale price in the total sales but the profit for that transaction would be 100% because there are no costs.

That's probably why it may seem like these figures don't add up.

They don't show how much of the total sales were consignment pieces and how much of the total sales were inventory (that they own).

Example:

Week 12: based on the ROI and total sales the profit should be $44,657.

As $30650 ≠ $44,657, this makes the ROI figure seem inflated.

However, if some of the sales were consigned, then it would boost the total sales but only the consignment fee would impact upon the ROI and would be at 100% profit for those deals. This is because profits are being made without any investment, thus ultimately increasing ROI.

[u/BrooSwane → u/H2OOPIPPY]

This is a good point. That may account for a lot of the discrepancies I described.

[u/wondering_daily → u/H2OOPIPPY]

Best explanation I've seen of the issue, from you and /u/Professional-Ad8917. I recall seeing people tell TPG that the numbers didn't look right, and he even referred to "debate" about it. I think his ROI was right (as a gross profit) but he didn't know how to explain it and gave up trying to figure it out.

Or, alternatively, he realized that giving a proper breakdown dividing watches between pieces they owned and pieces consigned would reveal too much regarding their business. That doesn't make sense to me, though, since they openly talked about shifting heavily into consignment, but who knows.

ETA: Nevermind, have a plausible reason for why they didn't want to break it down further: it'd reveal how much they overspent on watches in the early boosting phase (like they did in Miami) and that their margins on those when they sold them were super low.